Dáil Éireann Debate, Tuesday - 19 July 2016
223. Deputy Joan Burton asked the Minister for Finance the number of real estate investment trusts which exist since their introduction; the cost to the Exchequer in tax foregone or other tax advantages conferred on such trusts or schemes; and if he will make a statement on the matter. [22748/16]
View answerI am informed by the Revenue Commissioners that there are currently three Real Estate Investment Trusts (REIT) established and operating in Ireland.
Section 41 of the first Finance Act of 2013 introduced the regime for the REIT. A REIT is a collective investment vehicle designed to hold properties in a tax neutral manner. The function of the REIT framework is not to provide an overall tax exemption, but rather to facilitate collective investment in rental property by removing a double layer of taxation which would otherwise apply to property investment via a corporate vehicle. As such, the estimated cost attached to REITs relates not to tax foregone, but rather to the move from direct taxation of rental income in the hands of investors, to the taxation of dividends distributed to investors from REIT profits arising from that rental income. A REIT is exempt from any tax on its qualifying income and gains from rental property, however, the REIT is obliged to distribute 85% of its profits to shareholders.
The overarching objective of the REIT regime is to remove a tax bias - caused by the double layer of taxation - which typically discourages risk-diversified collective investment in property through a company.
